Affordable Housing Delays Mean a Bigger Bill for the Public

It will soon be a smidgen easier to build affordable housing in the city. But a thicket of hazards and roadblocks could still potentially snarl affordable housing developers for years. It’s a painful process, but to some in the city — including, oddly, some developers — it’s nearly sacred

The Board of Supervisors voted yesterday 10-1 in favor of a new law (proposed by Supervisor Scott Wiener) allowing housing projects composed completely of below market rate units to skip the requirement for a conditional use permit. In plain English: one less Planning Commission hearing, and you save the 3 to 6 months it may take to get that hearing.

It’s an end-run around just one part of the entitlement process, but every little bit counts. Because when you’re building in San Francisco, time isn’t just money, it’s a small fortune.

[jump] Ask Patricia Scott, executive director of the Booker T Washington Center, which provides housing for foster youth who are aging out of the system, a project that took the better part of a decade due to CEQA challenge. Scott estimates that the delays ended up costing them an extra $10 million, because construction costs climbed steadily during that decade .

“We had hearings and hearings and hearings. We had hearings up the wazoo,” Scott says, sounding like she’s still not recovered from it. She refers to the project’s infancy as “10 years ago, when I was 25 years younger.”

Any development in San Francisco is likely to hit delays, but affordable housing is particularly vulnerable. For starters, affordable housing developers have a harder time raising capital in the first place — if BMR projects were an attractive investment for capitalists, they’d already be the rule instead of the exception.

Affordable projects rely on public subsidies to make up for what private investors won’t put into them. But qualifying for public money means getting permitted in time; blow your deadline and there goes one-third of your budget. It’s worse these days, because there’s less and less to even go around.

“State funds are dwindling,” says Rob Poole, project manager for the San Francisco Housing Action Coalition (a notably developer-friendly non-profit). “That leaves everyone to scramble and come up with as many local dollars as possible. It’s a struggle.”

When you end up with a higher project bill because you missed a deadline for public subsidies, where does the extra scratch come from? Public subsidies.

“Delay comes out of the public pocket,” says Don Falk, CEO of Tenderloin Neighborhood Development. By the time you get to the subsidy phase, he explains, you’ve usually already squeezed out all of the private funds you’re going to get. Miss your chance to net a subsidy now, and you probably need an even bigger subsidy later.

But here’s the weird part: Even though these people have every reason to hate this process, it can be very difficult to get any of them to say so. Ask about it, and you’re more likely to hear them talk up the very community tools that stymie them.

“I’m not surprised that people push back” on change, says Jeff Buckley, the mayor’s primary housing adviser. “They’re working from a community development strategy that makes sense for a certain time and context. Homeowners will always want some control of their neighborhood identity.”

Buckley says he’s not particularly fond of the “hysteria” and politics of building. But he stops short of decrying the process.

“As we say in the business: Where you stand depends on where you sit,” says Falk. In other words, one person’s needless red tape is another person’s crucial bulwark. “These measures achieve important objectives — even as they get in the way of other important objectives.”

(The exception to this phenomena is Patricia Scott, who wearily declares that she doesn’t see any way to make the bureaucracy go faster until the process changes.)

And that’s maybe the worst part about the system: It’s not bad enough. If it was broken in some obvious way, it probably wouldn’t be hard to think of a fix. But a theoretically good system that’s simply subject to abuse, or that has the potential to deal a rotten hand to the most vulnerable projects, is harder to reform, because the baby and the bathwater stick close together

Wiener’s bill is a baby step, most likely because baby steps are the only ones that feel safe to take. On one hand, caution is wise. But is making sure that the next 10-year project only takes 9-and-a-half years instead really the best we can do? Or just the best anyone dared to put their name on?